When Greece Was Rich—and Why

Did political decentralization foster classical civilization? That is one of the central claims of this fascinating new work of analytical history by the Stanford political scientist and classicist Josiah Ober.

Ober uses the tools of institutional political economy to explore the causes of economic and cultural “efflorescence” in ancient Greece. Rather than focusing on the impacts wrought by individual decision-makers animated by distinctive outlooks or on the aftereffects of great fortuities, Ober does social science, using the evidence of history to test hypotheses about the significance of political institutions and economic policy to human progress.

“Fair rules and competition within a marketlike ecology of states promoted capital investment, innovation, and rational cooperation in a context of low transaction costs.” This is the hypothesis Ober tests on the ancient Greek city-state (polis), which persisted from roughly 600 BC to the Roman conquest in the early second century BC. There are two parts to the hypothesis: one has to do with the political institutions Greek city-states adopted (fair versus unfair rules), and the other has to do with the change over time in economic integration and military rivalry among independent poleis (more or less competition). He takes advantage of the kaleidoscopic variety of institutional forms among the Greek states to investigate how their different political rules affected incentives for investment and exchange and therefore economic growth. He also explores how competition and rivalry over time affected the proportion of Greek city-states that adopted institutions that created good incentives.

The theory is explicitly inspired by Daron Acemoğlu and James Robinson’s concepts of “inclusive” and “extractive” institutions, as discussed in their book Why Nations Fail, and the similar distinction between “natural states” and “open-access orders” in Douglass North, John Wallis, and Barry Weingast’s book Violence and Social Orders. The vast majority of political orders have been natural states, organized primarily for extracting wealth from laborers, farmers, and traders—who lack political rights—and transferring that wealth to a tiny elite that specializes in the production of organized violence. How do societies ever manage to move from the natural state to an open-access order, in which the creators of wealth are able to exercise some control over those who rule them and thereby limit predation?

To answer this question, Ober does resort to the explanatory tools of a traditional historian. In Athens, the beginnings of an open-access order come in 594 BC, when the elite of the city try to put an end to social disorder by calling on the lawmaker Solon to craft a new political settlement. The core of the dispute sounds quintessentially modern: the masses wanted to expropriate the property-owning elites. If we can believe the texts passed down to us, Solon struck a grand bargain whereby the legal immunities of citizenship were extended to a wide cross-section of the population, debts were canceled on a one-time-only basis, enslavement of Athenian citizens was prohibited and existing Athenian slaves were freed, limits on freedom of movement were lifted, acts of hubris (humiliation and intimidation) were prohibited, citizens gained the right to pass criminal judgment on state officials, the right of citizens to participate in public assemblies was formalized, and private property rights in land were secured. Together, these reforms gave the “middle class” political equality, while also safeguarding the sources of economic inequality (and innovation). Over time, these democratic institutions were broadened and deepened. As Athens grew, it was transformed into a federation in which many political decisions were devolved to sub-jurisdictions (demes), which in turned joined together in artificial “tribes” (phyles). Yes, Athenians owned slaves, and women were forbidden from participation in public life, but in the context of the ancient world, Athens’ political and economic institutions were remarkably associational and inclusive.

The contrast with Sparta could not be stronger. Sparta’s semi-mythical lawgiver, Lycurgus, established an oligarchic, ascetic, quasi-totalitarian order. A small fraction of Spartans were citizens, and they were expected to be full-time soldiers. They were required to contribute a minimum share of food to the regimental mess, food produced by their Laconian and Messenian slaves (helots). Spartans kept control of the helots through periodic campaigns of terror and mass murder. Citizens could fall to the rank of “Inferior” if they failed to provide their food share, and many did. At the same time, economic equality, at least in consumption, was austere. Spartan homes were strictly regulated to ascetic standards, and conspicuous consumption was banned, though private inequality in landholdings was great. Spartans were expected to enforce these rules on each other through constant surveillance, what Ober calls the “Spartan social panopticon.”

The economic and cultural consequences of the different systems were also a study in contrasts. One of the most remarkable contributions of Ober’s book is its demonstration of just how rich Athens and other Greek poleis were. Taking together all Greek poleis that occupied the area ruled by the Greek state in AD 1890—ignoring the many Greek and Hellenized poleis in other parts of the Mediterranean—modern Greece did not surpass classical Greece’s peak population until 1924, nor its peak urban population until 1931. The Greek world’s urban share of the total population in the late fourth century BC (32 percent) is much higher than the peak urbanization rate of the Roman Empire (10-12 percent), England and Wales in 1688 (13 percent), or France in 1788 (12 percent). If we convert pre-modern wages into a common standard of liters of wheat per day, the daily wage for an Athenian laborer or infantryman in the late fifth century (around the time of the Peloponnesian War) was about nine liters per day. A century later, that figure stood at 13-16 liters per day. By contrast, wages for at least 85 percent of the Roman population of the early imperial period stood at around the subsistence level (3.5 liters per day). A laborer in 16th-to-18th-century Holland, when it was the richest country in the world, could have expected to make between 10 and 17 liters per day.

In other words, the Athens of Aristotle was likely richer on a per capita basis than the France of Molière or the England of Shakespeare. While Athens was an extraordinarily rich polis, the rest of classical Greece shared in the prosperity. Ober constructs an index of per capita consumption based on wheat wages for “core Greece” from 1300 BC to AD 1900. He finds that per capita consumption peaked between 400 and 300 BC, fell slightly with the Macedonian conquest, and only fell back to pre-modern norms after a century of Roman rule. By AD 1900, in a world of railroads, the telephone, and transatlantic steamers, per capita consumption in core Greece was still at least 30 percent below the prosperity attained when Plato taught at the Academy.

What accounts for this remarkable prosperity? Athens’ institutional innovations have already been mentioned. Another important element of Ober’s account is the political decentralization of the Greek world. For the Greeks, the polis was the fundamental political unit. There were over 1,000 independent poleis during the classical period. Some smaller poleis lost their political independence from time to time, but there was a natural tendency for the polis to reconstitute itself when political conditions were favorable.

The polis ecology survived in part because of the geography of the Greek world. A highly indented coastline and myriad islands reduced transportation costs and promoted trade—sea travel being much quicker than overland—while also helping to give poleis defensible frontiers. The mountainous interior also helped in the latter regard. Poleis constructed city walls as soon as they were able, which conferred a substantial defenders’ advantage. Some military powerhouses, most notably Sparta, could not undertake long-term siege operations because they had to supervise their slaves at each harvest. Athens eventually did build an empire in the fifth century, only to see a Spartan-led coalition demolish it. The Greek city-state world was multipolar, and poleis were quite willing to federate together in order to maintain their security and internal autonomy. Several of these federations were long-lasting and successful, such as the Aetolian, Achaean, and Chalkidian Leagues.

Trade and commerce among the poleis and with the barbarian world encouraged specialization and the division of labor. Poleis like Athens with open-access economic policies led the way into skilled artisan trades, rising above subsistence agriculture. The Greek political economy was remarkably resilient: it managed to reconstitute itself after the devastating Peloponnesian War and again after the Macedonian conquest and the death of Alexander. Syracuse, a Corinthian colony on the east coast of Sicily, developed into a “super-polis” like Athens and Sparta, only to collapse in a succession of tyrannical regimes and civil wars—and then to rise again, stronger than before, under a democratic regime.

Wealth often allowed more inclusive poleis to dominate tyrannies and extractive orders. Over time, the Greek world became more democratic.

In the end, however, the poleis could not withstand Macedon and Rome, both of which enthusiastically adopted Greek technologies, made their own improvements, and focused on military discipline and conquest. The Greek polis culture was inherently counter-imperial, and even as the Greeks gained in freedom and wealth from their decentralized order, they paid in coordination costs. Athens and Sparta did manage to coordinate to defeat the vast Persian Empire in the fifth century, but after Sparta’s fourth-century decline, the Athens-Thebes-Corinth alliance was insufficient to stop Philip II of Macedon’s advance. The extraordinary fertility of Greek civilization allowed non-Greek conquerors to hire Greek advisors, buy Greek weapons, and copy Greek coinage, laws, and military tactics.

If one were to lodge any complaints about Ober’s book, mine would be that it often deploys social-science jargon where none is needed, potentially putting off some readers. Furthermore, some of the economics is heterodox and unpersuasive: Ober repeatedly claims that high working-class wages in Athens promoted economic growth because they provided “demand” for the goods Athens produced. But human needs—“demand”—are infinite, regardless of the structure of economic inequality. No economist would attribute long-run growth to aggregate demand, which is a cyclical concept. Instead, productivity gains, coming from growing networks of exchange and improvements in technology, explain growth. (To be sure, a degree of economic equality may assist growth through other channels, such as political stability.)

Still, this is a thought-provoking book with great depth. As the great political theorists of the modern era have always known, the ancient Greek experience provides immense empirical material to mine for insights into political science: how we design rules of politics to secure human freedom and well-being. We ignore the experience of classical civilization to our own disadvantage.

Jason Sorens is a lecturer in the department of government at Dartmouth College and is the founder of the Free State Project.

It is interesting that the “church-towns” of puritan New England were organized in the same was as the Greek city states and, according to David Hackett Fisher (Albion’s Seed”), they were even more prosperous than the Dutch Republic in the 17th Century and certainly more republican and more politically advanced.